AUD/USD: Rebounded after expected rate cut caused a temporary dip

Fundamental brief overview

AUD/USD ended up falling across the board after the Reserve Bank of Australia (RBA)  decided to lower the cash rate by 25bps to a fresh record low of 1.5%, which will be effective from 3rd August 2016. However, the drop was temporary and the price is starting to rebound up. The RBA’s rate cut was widely expected after Australia published its weak Q2 2016 inflation numbers in July. After all, the last time the RBA had to cut its rates was in May, almost immediately after the Q1 2016 inflation data had also printed disappointing numbers.

Technical Insights

Currency performances:

1-year performance: 3.1%

6 months performance: 5.11%

3 months performance: 0.7%

1-month performance: 1.02%

Short term time frame: AUD/USD (30min chart)

Trend analysis: Bullish (50 SMA above 200 SMA).

Levels analysis: Critical support levels at 0.7544 - 0.7555 and critical resistance zone at 0.7659 - 0.7677

Price action analysis: Rounding bottom formation, the price may be way too extended in the short term.

Summary: Bullish indicators and price action. However, I am expecting the price to retrace down to the critical support zone at 0.7544 - 0.7555.



Long term time frame: AUD/USD (Daily Chart)

Trend analysis: Bullish (50 SMA above 200 SMA)

Levels analysis: Critical support zone at 0.71350 and resistance at 0.78290

Price action analysis: Consolidation in a huge symmetrical triangle formation with a double bottom formation which has broken its neckline at 0.7388.

Summary: Bullish indicators and price action, I am expecting the price to trend up gradually and break out of the triangle formation.



Secular Trend (Year on Year%): AUD/USD (Monthly Chart)

Summary: Positive (Above 0), increasing growth.



Currency's Sentiment (Base on CMC markets clients)

Number of buyers: 31%

Number of sellers: 69%

Position value of buyers: 10%

Position value of sellers: 90%

Overall sentiment: Bearish